About the industry

The petroleum industry is an expansive and indispensable sector that encompasses the
exploration, production, refining, and distribution of crude oil and natural gas products
worldwide. On a global scale, this industry is dominated by large multinational corporations like
ExxonMobil, Shell, BP, and national oil giants such as Saudi Aramco and Gazprom. These
companies undertake exploration activities across various regions, including the Middle East,
North America, Russia, and offshore locations, employing advanced technologies to locate and
extract hydrocarbon resources. The extracted crude oil is transported to refineries, where it
undergoes processing to produce petroleum products like gasoline, diesel, jet fuel, and
petrochemicals. These refined products are then distributed through an intricate network of
pipelines, tankers, and trucks to cater to the energy needs of industries, transportation sectors,
and households globally. The petroleum industry operates as a global trading market, with major
oil-producing nations exporting to regions with high energy demands. OPEC (Organization of
the Petroleum Exporting Countries) plays a crucial role in influencing oil prices and supply
levels worldwide.
From an Indian perspective, the country possesses substantial oil and gas reserves, with major
production centers in states like Assam, Gujarat, and offshore regions like the Krishna-Godavari
Basin. However, domestic production falls short of meeting India’s growing energy demands,
necessitating significant imports from countries like Saudi Arabia, Iraq, and the UAE. India
boasts a well-established refining and distribution infrastructure, with major refineries operated
by companies like IOCL, BPCL, and HPCL, supported by a vast network of fuel stations across
the nation . Despite the industry’s importance, it faces challenges related to greenhouse gas
emissions, climate change, and the need for sustainable energy solutions, driving the push for
cleaner technologies and a transition towards renewable energy sources globally.

Selection of companies
Company name: Indian oil
Compititor: Reliance petroleum
Reason:
Indian Oil Corporation Limited (IOCL) is a state-owned oil and gas company and isone of the
largest players in the Indian petroleum industry. It has a significant presence across the entire
value chain, including exploration and production, refining, transportation, and marketing of
petroleum products. IOCL operates several refineries and has a vast network of fuel stations
across the country.
On the other hand, Reliance Industries Limited (RIL), a private conglomerate, has emerged as a
disruptive force in the Indian petroleum industry through its subsidiary, Reliance Petroleum
Limited (RPL). RIL entered the refining and marketing segment with the commissioning of its
state-of-the-art refinery in Jamnagar, Gujarat, which is one of the largest refineries in the world.
Both IOCL and RIL (through RPL) have significant refining capacities, vast distribution
networks, and a strong presence in the retail fuel market. They compete intensely for market
share, securing contracts for supplying petroleum products, and expanding their retail presence
through the establishment of new fuel stations.
The “IOCL vs RIL” battle is a common discussion in the Indian petroleum industry circles, as
these two giants vie for dominance in various segments, including refining, marketing, and
petrochemicals. The competition and disruption brought about by RIL’s entry into the petroleum
sector, akin to L&T’s impact in the construction industry, make IOCL and RIL suitable choices
for competitor analysis in the Indian petroleum industry.
 Introduction to the companies
Indian oil:
Indian Oil Corporation (IOC) is India’s largest commercial enterprise and a leading integrated
energy company owned by the government. Formed in 1964 through a merger, IOC has
operations spanning the entire oil and gas value chain. IOC operates 11 of India’s 23 refineries
with over 80 million tonnes per annum refining capacity. Its major refineries are spread across
cities like Panipat, Gujarat, and Mathura. The company has an extensive 27,000+ petrol/diesel
station marketing network with over 30% market share. It also owns and operates one of the
world’s largest 13,600 km cross-country pipeline networks for transporting oil and petroleum
products.
In addition to refining and marketing, IOC is involved in upstream oil and gas exploration
activities through subsidiaries, with interests in domestic and international oil/gas blocks. As an
integrated energy major, IOC plays a vital role in meeting India’s growing energy needs and
economic growth.

Reliance Petroleum:
Reliance Petroleum, a subsidiary of Reliance Industries Limited (RIL), is a powerhouse in
India’s energy sector. Established by visionary entrepreneur Dhirubhai Ambani, the company has
a diverse operational scope that includes hydrocarbon exploration and production, petroleum
refining and marketing,petrochemicals, and a robust retail market presence**. Its flagship
refinery in **Jamnagar, Gujarat**, is the world’s largest at a single site, reflecting Reliance’s
substantial refining capacity. The company’s retail network spans a vast number of fuel stations
across India, contributing to its significant market share. In terms of financials, Reliance
Petroleum has a formidable market capitalization, reported to be around **INR 58,882.5
crores**¹[3]. Engaged in **upstream oil and gas exploration**, it maintains a balanced portfolio
of resources both domestically and internationally. Embracing sustainability, Reliance is steering
towards an **Oil-to-Chemicals** strategy, fostering a circular economy. Moreover, it is actively
pursuing **new energy initiatives**, signifying its commitment to innovation and energy
security for India and beyond.
 DATA COLLECTION AND METHODOLOGY
The historical stock price data was collected from the Yahoo Finance website for the period
between 1ST APRIL 2022 TO 31ST MARCH 2023.

Methodologies used to analyse the data were mean, and standard deviation for the companies
Share prices and the index. Then beta is calculated to assess the risk of investment in the stocks
of Two companies selected for the analysis.

ANALYSIS AND INTERPRETATION

AVERAGE RETURN AND STANDARD DEVIATION: The stock return and market return is
calculated Using the formula – ((today’s value – yesterday’s value)/yesterday’s value )*100.

Indian oil Reliance petroleum Nse

Average return 0.152414 0.042535 0.053929

Standaed deviation 1.499949 1.418325 0.891777

Table -1 : mean and standard deviation values (values are obtained

through using standard formulas in excel).

BETA VALUE (SLOPE) :

Beta is calculated using slope formula in excel where Y axis is the company’s returns and X axis
is NSE 500’s returns.

Indian oil Reliance petroleum

Beta 0.811429 1.05803468
The average return indicates the mean daily percentage price change for a stock. The average
return value of Indian Oil is 0.152414, suggesting the stock has generally been profitable over
the period analyzed. On the other hand, Reliance Petroleum's average return of 0.042535 is
lower, indicating relatively lower profitability.
Standard deviation measures the volatility or risk of a stock's returns. A higher standard deviation
implies greater price fluctuations from the average. Indian Oil has a standard deviation of
1.499949, while Reliance Petroleum has a slightly lower standard deviation of 1.418325. This
suggests that Indian Oil's stock prices tend to exhibit higher volatility compared to Reliance
Petroleum.
Beta is a measure of a stock's volatility relative to the broader market (Nse). The beta value for
Indian Oil is 0.811429, and for Reliance Petroleum, it is 1.05803468. A beta less than 1 indicates
lower market-related volatility than the market, while a beta greater than 1 implies higher
volatility
Indian Oil: Indian Oil's beta of 0.811429 suggests that its stock has been less volatile than the
overall market during the analyzed period. This indicates a relatively lower level of market-
related risk for investors in Indian Oil.
Reliance Petroleum: With a beta of 1.05803468, Reliance Petroleum's stock has been more
volatile than the broader market. This higher beta value suggests that Reliance Petroleum's stock
prices are more sensitive to market movements, implying a higher level of market-related risk
compared to Indian Oil.

1. For Risk-Loving Investors: Risk-loving investors are those who are willing to take on
higher levels of risk for the potential of higher returns. In this case, they may prefer
Reliance Petroleum over Indian Oil. Reliance Petroleum has a higher beta of 1.05803468,
indicating that its stock prices are more volatile and sensitive to market movements
compared to Indian Oil's beta of 0.811429. This higher beta suggests that Reliance
Petroleum could potentially provide higher returns, although with greater market-related
risk. Therefore, risk-loving investors may lean towards Reliance Petroleum due to its
relatively higher risk-reward profile.
2. For Risk-Averse Investors: Risk-averse investors prioritize protecting their capital and
avoiding excessive volatility over maximizing returns. For these investors, Indian Oil
may be a better choice. Indian Oil has a lower standard deviation of 1.499949 compared
to Reliance Petroleum's 1.418325, indicating lower overall volatility. Additionally, Indian
Oil's beta of 0.811429 is lower than Reliance Petroleum's 1.05803468, suggesting that
Indian Oil's stock prices are less sensitive to market fluctuations. The lower beta and
standard deviation make Indian Oil a potentially more stable investment choice with
 fewer market-related price swings. Therefore, risk-averse investors may prefer Indian Oil
for its lower market-related risk.
3. Based on Risk and Return: When considering both risk and return, Indian Oil may be a
suitable choice for investors seeking a balance between the two. While Reliance
Petroleum's higher beta could potentially lead to higher returns, it also carries greater
market-related risk. Indian Oil, on the other hand, has a higher average return of
0.152414 compared to Reliance Petroleum's 0.042535, indicating better profitability.
Additionally, Indian Oil's lower standard deviation and beta suggest lower overall
volatility and market-related risk compared to Reliance Petroleum. Therefore, for
investors seeking a balance between risk and return, Indian Oil may be a more attractive
option, offering relatively higher returns with lower volatility and market-related risk.

GRAPHS(LINE CHART)
INDIAN OIL

Adj Close( indian oil)

140

120

100

80

60

40

20

0
2 2 2 2 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3
02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02
3/2 1/2 8/2 8/2 5/2 3/2 0/2 8/2 5/2 2/2 0/2 7/2 5/2 2/2 0/2 7/2 7/2 4/2 2/2 9/2 7/2 4/2 1/2 9/2 6/2 4/2
1/ 1/3 2/2 3/2 4/2 5/2 6/2 7/1 8/1 9/1 0/1 11/ 12/ 1/ 1/3 2/2 3/2 4/2 5/2 6/1 7/1 8/1 9/1 10/ 11/ 12/
1
 RELIANCE PETROLEUM

Adj Close(reliance)
3000

2500

2000

1500

1000

500

0
22 22 22 22 22 22 22 22 22 22 22 22 22 23 23 23 23 23 23 23 23 23 23 23 23 23
/20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20
3 1 8 8 5 3 0 8 5 2 0 7 5 2 0 7 7 4 2 9 7 4 1 9 6 4
1/ 1/3 2/2 3/2 4/2 5/2 6/2 7/1 8/1 9/1 0/1 11/ 12/ 1/ 1/3 2/2 3/2 4/2 5/2 6/1 7/1 8/1 9/1 10/ 11/ 12/
1

NSE

Adj Close(NSE)
25000

20000

15000

10000

5000

0
22 22 22 22 22 22 22 22 22 22 22 22 22 23 23 23 23 23 23 23 23 23 23 23 23 23
/20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20
3 1 8 8 5 3 0 8 5 2 0 7 5 2 0 7 7 4 2 9 7 4 1 9 6 4
1/ 1/3 2/2 3/2 4/2 5/2 6/2 7/1 8/1 9/1 0/1 11/ 12/ 1/ 1/3 2/2 3/2 4/2 5/2 6/1 7/1 8/1 9/1 10/ 11/ 12/
1
 CONCLUSION
Comparing Indian Oil and Reliance Petroleum, Indian Oil may appeal to risk-averse investors
due to its higher average return, lower standard deviation, and lower beta, indicating relatively
higher returns with lower overall and market-related risk. Conversely, Reliance Petroleum's
higher beta could attract risk-tolerant investors seeking potentially higher returns, albeit with
increased volatility and market risk. Regarding investment decisions, Indian Oil could be suitable
for investors prioritizing stability, while Reliance Petroleum may be worth considering for those
willing to accept higher risk for the possibility of higher returns. Ultimately, the choice should
align with an investor's risk tolerance, investment objectives, and portfolio diversification
strategy, as both companies offer distinct risk-return profiles.